Internet & Tech

Cross messages

Why two tech giants went to war

Qihoo ain’t Tencent’s buddy

Being rich certainly has its perks. In Shenzhen, for instance, the super-wealthy receive housing subsidies just for living in the city. Ma Huateng, the 39 year-old chairman and chief executive of Shenzhen-based Tencent – China’s largest internet company by market value – was found to receive a monthly subsidy of Rmb3,100 ($465) for having “made outstanding contributions to the city,” says the Beijing News.

After the news broke in late October, many Shenzhen residents were outraged, saying that city officials should be making provisions for the underprivileged, and not benefitting the elites. Tencent then announced that Ma would donate the money to charity.

The housing subsidy furore is not the only controversy involving Ma. Recently, Tencent, which operates QQ, China’s largest instant messaging tool, has been engaged in a bitter battle with Qihoo, the provider of 360, the most widely used antivirus programme.

The squabble began in September when Qihoo alleged QQ was scanning its 600 million users’ computers and leaking their personal data. Tencent, calling Qihoo’s accusations “malicious slander”, and responded by denying QQ services to anyone who had installed 360 software. Qihoo, in turn, moved to block QQ access through its own software.

The feud did not go unnoticed in Beijing. Li Yizhong, minister of industry and information technology, publicly lambasted the two for “irresponsible” behaviour, adding that he wanted the matter resolved swiftly.

“Entrepreneurs should have basic morals” and always look after consumers’ interests, he said.

At first glance, the fight between the two seems baffling. After all, Tencent and Qihoo were not even direct competitors – that is, until recently. Tencent has been developing its own antivirus software Diannao Guanjia, which will compete head- to-head with Qihoo’s 360.

Zhou Hongyi, chief executive of Qihoo, told the Economic Observer that Ma wants to leverage QQ’s monopolistic position (Tencent controls 80% share of the instant messaging market) to eliminate small players.

“Tencent’s attempt to use its controlling market position to force internet users to make a choice between two softwares is malicious monopolistic behaviour, and its demand that users uninstall software is unfair competition,” Wang Fengchang, chief executive of Laweach, a website that organises consumer complaints, concurs.

An online poll on Sina.com, a popular internet portal, also suggests that Tencent has taken a hit in the PR war. Of the 1.5 million that responded to the question “which programme will you desert between QQ and 360 if you have to,” more than 57% voted they’d ditch QQ, while only 23% signalled that they would choose to get rid of Qihoo.

One reason could be resentment at Tencent’s size and market power. Many say the QQ messaging tool has become something of an equivalent of the Windows operating system in the Western world, and compare Tencent’s tactics to the way Microsoft pushed aside Netscape with Internet Explorer. That sparked a wave of antitrust investigations in the US and Europe…

But perhaps it won’t get to that in China. The two parties seem to have reconciled – for now.

Tencent promised not to stop running QQ on computers that had installed 360. Qihoo then unplugged the tool that had irked Tencents (it had blocked QQ from scanning users’ computers, a move Tencent has insisted was not a privacy infringement but aimed at preventing users’ accounts from being stolen).

Interestingly, one winner in the QQ-360 contretemps could turn out to be Microsoft.

The tech giant’s MSN Messenger, a competitor to QQ, has seen a spike in new user sign-ups: from the tens of thousands normally experienced to millions per day since the flare-up between the two Chinese companies began, says the Wall Street Journal.


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